India, May 25 — Lockdown 4.0 has started and that too in a much leaner way. It is expected that life will now limp back to normal from 1st June. It has to. Mankind has always bounced back strongly after every castratrophe creating ways and avenues for a new era. It will be no different this time also.
While we have to adjust to a new life style, add some new habits, delete some redundant ones and pursue all our inevitable goals with more zeal and determination. “Need Goals” like our Emergency corpus, Children’s Education & Retirement Goals will have to be relooked, fine tuned and calibrated in a new situation in a more realistic manner and we have to push back our “Wants Goals” a bit further, if not dropped. Let’s draw our portfolio on these 6 frameworks :
1) Emergency corpus : We need to build a war chest of at least 12 months now. It was something in the range of 6-9 months earlier, but now, in order to sleep peacefully, you have to have an Emergency Corpus of 12 months.
Your emergency corpus of 3 months should be kept in your Sweep-in Savings Account (with linked Debit card) & remaining 9 months in Floating rate funds.
2) Health Insurance : Time to re-look and enhance your Health Insurance at the time of renewal. Your Family floater Health Insurance (for a 4 member family) should be a minimum of 15 – 25 Lacs now. Go through all the terms & conditions, coverage of diseases & do some home-work before finalizing a suitable one before renewal of this existing one.
3) Life Insurance : You need to take a minimum of Term Insurance of Rs.50 lacs – 1 Crore – depending upon your current income, premium paying capacity & your family size. Don’t opt for Endowment, Money-back or ULIP, even if your Banker advices so.
4) SIP : Your existing SIP-book needs to be revised now. Expected returns should be expected in the range of 12-14% pa for SIP’s of longer term (> 10 years). Lesser returns can still bring smile rather than not meeting your Life’s Need Goals. Additional returns will be Bonus. Your SIP should be restricted to 10-12 fund houses.
5) Parivartan : Sell all your non-performing Shares and convert them in an assured Profit under the Parivartan scheme. Out of flavor stocks won’t recover now when the market bounces back but your Parivartan portfolio will surely give you an assured profit with zero down-side risk. Changed times require a different approach.
6) Expert’s Advice : Take the service of an experienced knowledgeable Mutual Fund expert to construct your new portfolio. Opting for “Direct” has its own costs & demerits. Self-medication is not advisable in these troubled times. You need to focus upon more important things rather than in saving just 1%.
You can send your query & portfolio (in an excel file) to us at email@example.com for advice.
Develop the immunity for your body & investment portfolio, to tide over this current pandemic.
About the expert: Manoj Garg : MBA, CPFA, IRDA Certified of Tata Mutual Fund. He owns Simply Invest – A Mutual Funds advisory company.For any query with respect to this article or any other content requirement, please contact Editor at firstname.lastname@example.org